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Short-term pain, long-term gain for RI
Many eyes are on Indonesia, questioning the attractiveness of the country as an investment destination amid significant rupiah depreciation.
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For some time, the rupiah has been under pressure from the tightening of US monetary policy. (Antara/Puspa Perwitasari)
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any eyes are on Indonesia, questioning the attractiveness of the country as an investment destination amid significant rupiah depreciation. Is it still smart to put money into the country? Will the country survive the exchange rate depreciation? Or is the country turning towards protectionism? These are some of the questions posed by many Indonesia observers, especially global investors.
The short answer is that there are still many robust medium and longer investment prospects in Indonesia, especially for direct investment.
The current rupiah depreciation masks the abundant potentials the country offers. The current depreciation of the rupiah is the result of external factors, most notably the increase of United States Federal Reserve interest rates. It is not permanent and should not be the basis for analyzing the prospects of the country.
Normally, capital accounts have served as a mechanism to “manage” the country’s balance of payments. Until the last quarter of last year, surplus capital accounts have been able to fill the deficit from current account transactions.
